There’s a new “must read” today from economist Patrick McHugh at the Budget and Tax Center. Here’s the summary:
North Carolina currently faces an important choice between two different paths for creating jobs and strengthening the economy, according to a new report from the Budget & Tax Center, a project of the NC Justice Center. One would make the state a research and commercial hub rivaling Silicon Valley and the Boston’s Route 128 corridor and the other would emphasize low taxes and lax regulation.
Governor McCrory often emphasizes the innovation-driven strategy, calling for North Carolina to become the third “vertex of innovation” through proposals that would build on decades of public investment in education as well as partnerships between research institutions and the private sector. However, the state also continues to reduce taxes, particularly for the wealthiest North Carolinians, and ask less of large, profitable multinational corporations when it comes to paying for public services. North Carolina now faces the decision about whether to compete on price or on quality.
“The low-tax strategy is about competing on price – making the state a cheap place to do business in the short run by reducing companies’ taxes,” said Patrick McHugh, policy analyst with the Budget & Tax Center and author of the report. “The innovation-driven strategy is about enabling North Carolina workers and companies to produce quality goods that cannot be found everywhere. Cutting taxes has already scaled back precisely the kinds of investment that are needed to compete with the Bostons and Silicon Valleys of the world.”
These innovation centers have both outdone North Carolina and our neighbors to the south in the aftermath of the recession. Massachusetts had 4.1 percent more jobs in February of 2015 than it did at the end of 2007, and even California, which was slammed particularly hard by the collapse of the housing market, has managed to get employment back to 3.4 percent above the pre-recession level. Read more